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Allana Potash Announces Positive Feasibility Study at Its Danakhil Potash Project

Investor Conference Call planned for February 4th, 2013 at 3:00 p.m. EST

TORONTO, ONTARIO -- (Marketwire) -- 02/04/13 -- Allana Potash Corp. (TSX:AAA) (OTCQX:ALLRF)

--  After-tax Net Present Value of US $1.32 billion, based on lower price
    expectations in current potash markets 
--  After-tax Internal Rate of Return of 33% 
--  Production capital expenditures including mining and processing
    facilities ("Production CAPEX") of US$579 million 
--  Port and logistics infrastructure ("Infrastructure CAPEX") of US $63
    million 
--  Total CAPEX Contingencies of US$64 million included in the Production
    and Infrastructure CAPEX estimates 
--  Total production operating expenditures ("Production OPEX") of
    US$69.25/tonne 
--  Total transportation expenditures ("Transportation OPEX") (including
    transportation/handling, port, loading costs) FOB on Vessel of
    US$29.50/tonne 
--  Based on Annual Production of one million tonnes of MOP per year using
    solution mining from Proven and Probable Sylvinite Mineral Reserves only
--  Significant Carnallitite or Kainitite resources not included in the
    production plans in this Feasibility Study 

Allana Potash Corp. ("Allana" or the "Company") announces the results of a positive independent Feasibility Study ("FS") prepared by Ercosplan Ingenieurgesellschaft Geotechnik und Bergbau ("ERCOSPLAN") on its Danakhil Potash Project in Ethiopia (the "Project"). Allana's Board of Directors is pleased to congratulate the people and government of the Federal Democratic Republic of Ethiopia on the receipt by Allana of the first NI 43-101-compliant feasibility study on a potash resource in Ethiopia's Danakhil potash basin that defines one of the few economically viable greenfield potash projects in the world.

The FS is based on commercial operations that produce one million tonnes per year ("MTPY") of a standard grade Muriate of Potash ("MOP") product over an initial estimated operating life of approximately 25 years from Sylvinite Reserves at Allana's Danakhil Project in Ethiopia. The FS yielded, on an unlevered basis, an after-tax Internal Rate of Return ("IRR") of 33 % and an after-tax Net Present Value ("NPV") of US$ 1.32 billion based on a 10% discount rate.

Farhad Abasov, President and CEO of Allana commented: "Allana is extremely pleased with the very positive Feasibility Study of its Danakhil Potash Project, as prepared by ERCOSPLAN. Even with current potash market realities driving the lower potash price forecast of USD $430/tonne used in the FS, the favourable total production CAPEX of about US$579 million and port and transport CAPEX of US$63 million, make this project one of the lowest cost and potentially highest return greenfield potash projects worldwide. Similarly, the very competitive production OPEX at US$69.25/tonne, within a total, loaded-on-ship, OPEX of US$98.75/tonne FOB, is one of the lowest among greenfield potash projects currently under development."

Mr. Abasov added, "ERCOSPLAN modeled the production of one million tonnes of MOP from just the Sylvinite Zone on the project, excluding future potential production from the extensive Carnallite and sulphate-based Kainite resources. The FS's extremely positive results give Allana great confidence in advancing its project to development and securing project finance and offtake."

The key economic highlights of the FS are outlined in the table below (all dollar amounts are stated in US$):

----------------------------------------------------------------------------
After-tax [email protected]%                                               $1.32billion
----------------------------------------------------------------------------
After-tax IRR (based on 35% income tax rate)                             33%
----------------------------------------------------------------------------
Estimated Total Capital Expenditures (including                             
 production, port and logistics and contingency)                $642 million
----------------------------------------------------------------------------
Estimated Total Operating Expenditures (Production,                         
 transportation, port, FOB on vessel)                       $98.75/tonne MOP
----------------------------------------------------------------------------
Payback period                                                     3.1 years
----------------------------------------------------------------------------
Total MOP product from Proven and Probable Sylvinite                        
 Reserves,                                               23.7 million tonnes
----------------------------------------------------------------------------

For the purpose of the FS, capital expenditures (CAPEX) were estimated for three main categories: Production using solution mining, solar evaporation and flotation (Production); Transportation and handling of product between the production site and the port (Transportation/Handling); and Port facilities in Djibouti (Port).

The Production CAPEX includes costs associated with cavern development, the solar evaporation ponds, brine processing, and infrastructure including power. Solar evaporation of the saturated brine solution is possible at the Danakhil Project due to the year-round hot temperatures averaging 34 degrees C daylong with very little rainfall. Salts harvested from the ponds will be processed by standard flotation to create an MOP product of a standard grade sufficient for direct application as fertilizer or as feedstock for processed or blended fertilizers.

Transportation CAPEX costs are based on a company owned fleet of trucks and all support, such as maintenance. Port CAPEX costs are based on Allana constructing its own storage facility and conveyor system at the new port of Tadjourah in Djibouti. The main portion of the port, primarily the quay, ship loader and associated infrastructure, is commencing construction and will be completed by the Djibouti Port Authority. The table below outlines the estimated capital expenditures in US$ (2013$) for all categories, including indirects and allocated contingencies.

----------------------------------------------------------
Total Estimated CAPEX                         $642 million
----------------------------------------------------------
  Estimated Production CAPEX                  $579 million
----------------------------------------------------------
  Estimated Transportation/Handling CAPEX      $29 million
----------------------------------------------------------
  Estimated Port CAPEX                         $34 million
----------------------------------------------------------

Estimated operating expenditures (OPEX) were also calculated for Production, Transportation/Handling, and Port. The OPEX costs in US$ per tonne (2013$), including G&A and contingencies, are outlined in the table below:

-----------------------------------------------------------
Total Estimated OPEX                           $98.75/tonne
-----------------------------------------------------------
  Estimated Production OPEX                    $69.25/tonne
-----------------------------------------------------------
  Estimated Transportation/Handling/Port OPEX  $29.50/tonne
-----------------------------------------------------------

Estimated sustaining capital during operations is estimated at US$ 24.3 million (2013$) per year once operations reach steady state full production at 1 MTPY.

The economic analysis performed in the FS was based on the following assumptions:

Production:      One million tonnes MOP per year from Sylvinite, with first 
                 product in 2015, and bulk shipments ramping up from 2016 to
                 full 1 MTPY production rate by the end of 2017             
                                                                            
Mine life:       25 years, based on currently defined reserves of Sylvinite 
                 only                                                       
                                                                            
Mining method:   Solution mining                                            
                                                                            
Processing:      Solar evaporation and flotation                            
                                                                            
Transport:       Trucking to Djibouti                                       
                                                                            
Power:           Power generation with fuel oil shipped to site             
                                                                            
Potash Price:    US$430 per tonne (2013$)                                   
                                                                            
Underlying NSR:  1.5% (after partial buyout of royalty)                     

The economic analysis also included government tax and levies based on current Ethiopian published legislation and regulation, assuming:

Government Royalties:              4% on revenue
Government free carried interest:             5%
Corporate taxes:                             35%

The FS estimates include all infrastructure required to operate a potash solution mine and to bring the product to market including cavern and wellfield installation, three stage processing plant, product storage facilities, load out, trucking fleet and port storage facilities with all necessary infrastructure.

Summary of Mineral Reserve and Resource Estimates Update

The Company also announces that as a result of the proposed mine plan and favourable economic results developed in the FS, portions of the previously reported measured and indicated sylvinite mineral resource estimates have been upgraded to proven and probable sylvinite mineral reserves. Estimates of the updated mineral reserves and mineral resources were completed by ERCOSPLAN based on a Radius of Influence (ROI) as per industry standards. The following Tables outline the current estimated sylvinite mineral resources and proven and probable sylvinite mineral reserves. All Measured and Indicated Sylvinite Resources were converted to Reserves.

Summary of Mineral Resource Estimates effective as of February 2, 2013

-----------------------------------------------
RESOURCES   TONNES (MT)     KCL (%)    KCL (MT)
              (in-situ)                        
-----------------------------------------------
Measured         115.31        27.8        32.0
-----------------------------------------------
Indicated        212.11        28.6        60.7
-----------------------------------------------
Inferred          90.76        27.8        25.2
-----------------------------------------------

(i)ROI for measured, indicated and inferred Sylvinite mineral resource estimates are 350 metres, 750 metres and 1500 metres respectively. Cut-off grade is 15% KCl, minimum width is 1.5 metres, density average 2.15

Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimates of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.

The quantity and grade of reported inferred resources in this estimation are uncertain in nature and there has been insufficient exploration to define these inferred resources as an indicated or measured mineral resource and it is uncertain if further exploration will result in upgrading them to an indicated or measured mineral resource category

Summary of Mineral Reserve Estimates effective as of February 2, 2013.

----------------------------------------------------------
           MINEABLE TONNES                                
RESERVES          (MT)(ii)         KCL (%)  MOP (M TONNES)
----------------------------------------------------------
Proven               32.97            28.0             8.2
----------------------------------------------------------
Probable             60.81            28.8            15.5
----------------------------------------------------------
TOTAL                                                 23.7
----------------------------------------------------------

(ii) Accounts for losses in the caverns as well as in pillar material between caverns.

(i)ROI for Proven and Probable Sylvinite Mineral Reserves are 350 metres and 750 respectively. Cut-off grade is 15% KCl, minimum width is 1.5 metres, density average 2.15, potash price of $430/tonne and other key assumptions listed above. The estimates of mineral reserves may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.

The Proven and Probable Reserves from Sylvinite zone alone are adequate to support production of 1 million tonnes per year of MOP for approximately 25 years. Pilot testwork continues on site as a second solution mining well is currently leaching the Upper Carnallitite unit to provide data on the production of MOP from a Carnallite-rich brine. The results of this study will be used for potential increase in production tonnage in the future.

The FS, with a cost estimate accuracy of +/- 15%, was completed by ERCOSPLAN, a widely recognized world leader in potash exploration techniques and potash mining and processing. In addition to Allana, ERCOSPLAN's clients include some of the largest potash exploration companies and potash producers in the world. An NI 43-101 technical report with respect to the FS (the "FS Technical Report") and the mineral resource and reserve estimates forming the basis of the FS report will be available under the Company's profile on SEDAR and Allana's website within 45 days of this news release.

The Feasibility Study and the mineral resource and reserve estimates were completed by ERCOSPLAN under the supervision of Dr. Henry Rauche, Ph.D., EurGeol, Managing Director, CEO ERCOSPLAN and Dr. Sebastiaan van der Klauw, Ph.D., EurGeol., Consulting Geologist, ERCOSPLAN who are both independent Qualified Persons for the purposes of National Instrument 43-101. Peter J. MacLean, Ph.D., P. Geo., Allana's Senior VP Exploration, is the Company's designated Qualified Person for the purposes of the Feasibility Study and has reviewed and approved the technical information presented in this release.

An Investor conference call and webcast to review the FS results will be held at 3:00 p.m. (EST) today, Monday, February 4, 2013. To participate on the call please dial:

Participant Dial-In Numbers:                  
TOLL-FREE (North America)   1-888-395-3227    
TOLL-FREE INTERNATIONAL     1-719-325-2484    
                                              
Replay Dial-In Numbers:                       
TOLL-FREE (North America)   1-877-870-5176    
TOLL-FREE INTERNATIONAL     1-858-384-5517    
                                              
Replay Pin Number:          3946278           

(The replay will be available starting at 6:00 p.m. EST today, and archived on www.allanapotash.com for ninety days thereafter).

To view the slide deck during the webcast, please register at:

Webcast Presentation Link:https://viavid.webcasts.com/starthere.jsp?ei=1013058

Please register at least 10 minutes prior to the 3:00 p.m. start. A Q&A session will follow the presentation.

About Allana Potash Corp.

Allana is a publicly traded corporation with a focus on the acquisition and development of potash assets internationally with its major focus on a previously explored potash property in Ethiopia. Allana has secured financial support from two significant strategic investors: IFC, a member of World Bank Group, and Liberty Metals and Mining, a member of Liberty Mutual Group. Allana has measured and indicated Sylvinite resources as at February 2, 2013 of 327.42 million tonnes of 28.31% KCl; and inferred Sylvinite resource of 90.76 million tonnes grading 27.80% KCl, as outlined in this press release. In addition, the Danakhil Projects hosts measured and indicated Kainitite resources of 701.55 million tonnes at 20.26% KCl, inferred Kainitite resource of 373.71 million tonnes of 20.35% KCl; measured and indicated Upper Carnallitite resources of 78.5 million tonnes grading 18.4% KCl, inferred Upper Carnallitite resource of 155.53 million tonnes of 16.95% KCl; measured and indicated Lower Carnallitite resources of 269.10 million tonnes of 10.86% KCl, inferred Lower Carnallitite resource of 130.7 million tonnes grading 11.7% KCl. The foregoing mineral resource estimates with respect to Kainitite and Carnallitite are as at April 27, 2012. For more information with respect to the data verification procedures undertaken and the key assumptions, parameters and risks associated with the foregoing estimates refer to Allana's Technical Report entitled "Updated Resource Report for the Danakhil Potash Deposit, Afar State/Ethiopia" dated June 13, 2012, effective April 30, 2012 filed at www.sedar.com. And the FS Technical Report to be filed on SEDAR within 45 days from the date of this release. Allana has approximately 275.9 million shares outstanding. Allana trades on the Toronto Stock Exchange under the symbol "AAA".

Cautionary Notes

Except for statements of historical fact relating to the Company, certain information contained herein constitutes "forward-looking information" under Canadian securities legislation. Forward-looking information includes, but is not limited to, statements regarding the results of the feasibility study, next steps for the property, progress in development of the property, projected capital and operating expenses, anticipated production schedule, the size and quality of the company's mineral resources and reserves, progress in development of mineral properties, future capital and operating expenses, capital and operating production costs, future potash prices and treatment charges, the financial results of the company the future financial or operating performance of the Company, the prospective mineralization of the properties and planned exploration programs., the issue of permits, future production and sales volumes, capital and production costs, demand and market outlook for potash, planned exploration programs, anticipated production schedule and terms and the availability and likelihood of future acquisitions; government regulation of mining operations; environmental risks; unanticipated reclamation expenses; and title disputes or claims; Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Estimates underlying the results of the feasibility study arise from engineering, geological and costing work of Ercosplan and the Company.

See the FS Technical Report, to be filed within 45 days of this news release, for a description of all relevant estimates, assumptions and parameters. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements or forward-looking information. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements and forward-looking information. The Company does not undertake to update any forward-looking statements or forward-looking information that are incorporated by reference herein, except in accordance with applicable securities laws.

Contacts:
Allana Potash Corp.
Richard Kelertas
Senior Vice President, Corporate Development
514 717-6256
[email protected]

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